The board of directors of Oriole Construction Company is meeting to choose between the cost-recovery method and the percentage-of-completion method of accounting for long-term contracts in the company's financial statements. You have been engaged to assist Oriole's controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information: 1. Oriole commenced doing business on January 1, 2024. 2. Construction activities for the year ended December 31, 2024, were as follows: Contract Costs Estimated Additional Costs Incurred Total Contract Billings Through Cash Collections to Through Through Complete 12/31/24 Project Price 12/31/24 12/31/24 Contract A $494,000 $334,000 $304,000 $418,000 $95,000 B 714,000 204,000 204,000 186,000 434,000 C 472,000 469,000 384,000 344,000 -0- D 187,000 94,000 62,000 117,000 91,000 E 444,000 394,000 394,000 314,000 78,500 $2,311,000 $1,495,000 $1,348,000 $1,379,000 $698,500 3. Each contract is with a different customer. 4. Any work remaining to be done on the contracts is expected to be completed in 2025. (a) * Your answer is incorrect. Compute the amount of income (or loss) before selling, general, and administrative expenses for the year ended December 31, 2024, which would be reported under: (1) The cost-recovery method. (2) The percentage-of-completion method (based on estimated costs). $ 98000 167400
The board of directors of Oriole Construction Company is meeting to choose between the cost-recovery method and the percentage-of-completion method of accounting for long-term contracts in the company's financial statements. You have been engaged to assist Oriole's controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information: 1. Oriole commenced doing business on January 1, 2024. 2. Construction activities for the year ended December 31, 2024, were as follows: Contract Costs Estimated Additional Costs Incurred Total Contract Billings Through Cash Collections to Through Through Complete 12/31/24 Project Price 12/31/24 12/31/24 Contract A $494,000 $334,000 $304,000 $418,000 $95,000 B 714,000 204,000 204,000 186,000 434,000 C 472,000 469,000 384,000 344,000 -0- D 187,000 94,000 62,000 117,000 91,000 E 444,000 394,000 394,000 314,000 78,500 $2,311,000 $1,495,000 $1,348,000 $1,379,000 $698,500 3. Each contract is with a different customer. 4. Any work remaining to be done on the contracts is expected to be completed in 2025. (a) * Your answer is incorrect. Compute the amount of income (or loss) before selling, general, and administrative expenses for the year ended December 31, 2024, which would be reported under: (1) The cost-recovery method. (2) The percentage-of-completion method (based on estimated costs). $ 98000 167400
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 25E: Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and...
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Transcribed Image Text:The board of directors of Oriole Construction Company is meeting to choose between the cost-recovery method and
the percentage-of-completion method of accounting for long-term contracts in the company's financial statements.
You have been engaged to assist Oriole's controller in the preparation of a presentation to be given at the board
meeting. The controller provides you with the following information:
1.
Oriole commenced doing business on January 1, 2024.
2.
Construction activities for the year ended December 31, 2024, were as follows:
Contract Costs
Estimated
Additional Costs
Incurred
Total
Contract
Billings
Through
Cash Collections
to
Through
Through
Complete
12/31/24
Project
Price
12/31/24
12/31/24
Contract
A
$494,000
$334,000
$304,000
$418,000
$95,000
B
714,000
204,000
204,000
186,000
434,000
C
472,000
469,000
384,000
344,000
-0-
D
187,000
94,000
62,000
117,000
91,000
E
444,000
394,000
394,000
314,000
78,500
$2,311,000
$1,495,000
$1,348,000
$1,379,000
$698,500
3.
Each contract is with a different customer.
4.
Any work remaining to be done on the contracts is expected to be completed in 2025.
(a)
* Your answer is incorrect.
Compute the amount of income (or loss) before selling, general, and administrative expenses for the year ended
December 31, 2024, which would be reported under:
(1)
The cost-recovery method.
(2)
The percentage-of-completion method (based on estimated costs).
$
98000
167400
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